Credit constraints and firms’ decisions: Lessons from the COVID-19 outbreak

Pierluigi Balduzzi, Emanuele Brancati, Marco Brianti and Fabio Schiantarelli

Journal of Monetary Economics, 2024, vol. 142, issue C

Abstract: Using novel survey data on Italian firms’ expectations, collected just before and after the beginning of the COVID-19 outbreak, we investigate the role of credit constraints in the transmission of adverse economic shocks. Our results show that credit-constrained firms plan to charge higher prices than unconstrained ones while expecting a larger fall in quantities. When we consider realized outcomes, however, these differences are less pronounced. This evidence is consistent with the credit programs implemented during the crisis being largely unanticipated at its outbreak and benefiting constrained firms relatively more.

Keywords: Firms; Credit constraints; Expectations; Plans; Prices (search for similar items in EconPapers)
JEL-codes: E2 E3 E44 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:142:y:2024:i:c:s030439322300106x

DOI: 10.1016/j.jmoneco.2023.09.006

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